If you are borrowing money for a higher education, it is important to understand what your loan is doing. Enter student loan servicers, who do just that. A loan servicer is the intermediary between you and your lender, responsible for managing your student loan once you go into repayment. Whether you’re in the process of paying off federal student loans or private student loans, understanding how your loan servicer operates can save you time, stress and even money.
This page will go into detail about what a loan servicer is, what it does, how to find yours, and the next steps if you’re having an issue with your student loan servicer.
What Is a Loan Servicer?
A loan servicer is a company that a lender (typically the U.S. Department of Education in the case of federal loans) assigns to handle the day-to-day management of your student loan. They are responsible for:
- Sending billing statements
- Collecting payments
- Monitoring your loan balance
- You have to apply any interest and late fees (if you have any)
- Assisting borrowers in enrolling in repayment plans or deferments
Enriching customer service and support
Essentially, they take care of the logistics of your student loan, while you deal with repayment.
Why Loan Servicers Matter
Student loan servicers are a critical piece of the borrower experience. A responsive and helpful servicer can make repayment feel achievable. Conversely, bad service or misinformation can create confusion, result in missed payments and affect your credit score.
Your loan servicer affects:
- How simple it is to change repayment plans
- How well deferments or forbearances are handled
- We only track loan forgiveness programs (PSLF is one), and how well you are doing in them
- Your payment history reporting is timely and accurate
- Knowing who your servicer is and how to talk to them are keys to successful repayment.
How to Locate Your Student Loan Servicer
If you have federal student loans, you can identify your loan servicer by signing in to your account at StudentAid. Follow your servicer’s instructions on Gov. Your servicer and your loan details will be listed.
Federal student loan servicers — one of which your loans is assigned to — are entities that handle your federal student loans for free. There are common ones, like:
- Nelnet
- Aidvantage
- MOHELA
- Edfinancial
- OSLA Servicing
- ECSI
With private student loans, you have to look up who the servicing company is through the lender or your credit report.
Widespread Problems with Student Loan Servicers
The student loan servicer industry has been criticized for poor customer service, miscommunication and mishandling repayment options, despite being critical. Common issues include:
Incorrect payment processing
- Not telling borrowers about repayment options
- Slow processing of deferments or forbearance
- Public Service Loan Forgiveness (PSLF) tracking errors
- Unclear communication about interest accumulating
These problems can result in loan delinquency, harm credit scores and hurt chances for loan forgiveness.
What to Do if You’re Having Trouble with Your Loan Servicer
If you run into issues, you can try the following steps:
- Get Paperwork: Written notes of all interaction with your loan servicer.
- File a Complaint: Report it with the Federal Student Aid Ombudsman Group, Consumer Financial Protection Bureau (CFPB), or Better Business Bureau (BBB).
- Switch Servicers (if you can help it): You can’t pick your servicer for federal loans, but if you consolidate your loan you might get a new one.
- Refinance with a private lender: If you have good credit and income, refinancing can allow you to choose a new servicer altogether.
Working with Your Loan Servicer: How to Do It Effectively
✦ Contact Your Student Loan Servicer — Have the Following Ready: To make the process go smoothly with your student loan servicer, please consider the following tips:
- Keep Your Contact Information Up to Date: Ensure your email, phone, and mailing address are up to date at all times.
- Enroll in Autopay: Many servicers give interest rate discounts for enrollment.
- Check Your Account Often: Look at statements and payment history for mistakes.
- Communicate Early: If you are experiencing financial hardship, reach out to your servicer early to discuss options such as income-driven repayment, or deferment.
- Know Your Repayment Plan: Ensure that the plan you’re on is the right one for your long-term financial goals.
Loan Servicers Are Offering Repayment Options
Federal student loan servicers provide a host of repayment options, based on borrowers’ income and employment status:
- Standard Repayment Plan: Equal payments over 10 years.
- Graduated Repayment Plan: Payments begin small and grow over time.
- Extended Repayment Plan: Fixed or graduated payments over 25 years.
- Income-Driven Repayment Plans (IDR): Payments depend on income and family size and can end in forgiveness after 20–25 years.
Be sure to speak with your loan servicer about which plan best suits your finances.
Loan Servicers and Public Service Loan Forgiveness (PSLF)
If you’re pursuing Public Service Loan Forgiveness (PSLF), your loan servicer is even more critical. Currently, MOHELA is the official PSLF servicer. To stay eligible, you must:
- Sign up for a qualifying income-driven payment plan.
- Make 120 qualifying monthly payments.
- Qualifying employer | Work full-time.
Your servicer should assist you with tracking qualifying payments, but it’s still on you to submit the Employment Certification Form (ECF) for review every year.
Private student loan servicers
Private loan servicers function quite differently. They might not include income-driven repayment or forgiveness options. But they can still assist with:
- Setting up auto payments
- Offering forbearance in situations of financial hardship
- Providing customer service for billing and payment inquiries
Here are some examples: Private loan servicers include:
- Navient
- Discover Student Loans
- Sallie Mae
- SoFi
- College Ave
Before signing, do some homework on the servicer’s reputation and repayment flexibility when borrowing private loans.
Impact on Student Loan Servicing Going Forward
The student loan servicing world is ever-changing. Several servicing contracts have changed hands in recent years, while additional oversight has been added to protect borrowers. As part of this effort, the U.S. Department of Education is continuing to build on its Next Gen FSA initiative to simplify the experience of managing a student loan and increase transparency.
Final Thoughts
One important first step in managing your student loans is knowing your loan servicer. Your student loan servicer can make a huge impact on your repayment experience — be it federal or private. Be informed, proactive and organized to maximize your repayment options — and work toward financial freedom with confidence.
